Ibec calls for long-term vision instead of putting 'as much money possible in people's pockets' in Budget 2025

Ibec coincidentally released its pre-budget submission one day after the Government named Jack Chambers as the incoming finance minister and the lobby group has laid out a series of suggestions for the 33-year old as businesses seek certainty this year as economic challenges linger and a general election looms. Photograph: Leon Farrell / Photocall Ireland

A business representative group has urged the Government to use long-term vision in the upcoming budget rather than lean towards more once-off measures in the run up to an election.

Ibec coincidentally published its pre-budget submission one day after the Government named Jack Chambers as the incoming finance minister who will have a “tight” budget to work with despite a robust economy, according to the lobby group’s chief economist Gerard Brady.

“The space for giveaways is very limited if you’re going to do the strategic things,” Mr Brady said.

Ibec estimated the Government has around €22bn worth of resources to work with however around half of this is already tied up with existing commitments including the Future Ireland Fund for pensions and the National Reserve Fund.

With these existing commitments as well as the self-imposed 5% spending rule, which the Government has often times breached, Ibec said the Government actually has around €4.5bn to play with in the upcoming budget.

Among its suggestions, the lobby group called for €2.2bn in tax cuts which will be offset by about €1.3bn in tax raised and €1.6bn to accelerate infrastructure investment for housing supply and water improvement developments which have long been capacity constraints for business looking to expand in Ireland.

In addition to a lack of infrastructure, Ibec indicated the US Inflation Reduction (IRA) Act could be luring foreign direct investment projects away from the Republic which threatens volatile corporation tax receipts that the economy has long-depended on.

"We're seeing competition, particularly from the US right now through the IRA Act where it's actually impacting investment in Ireland. The Government are alive to it, but they have to be alive to it in a budgetary sense as well," said Mr Brady adding that many firms are now looking for certainty from government.

Mr Brady also said Ibec continues to hear of “significant labour cost competitiveness pressures in the consumer facing sectors” and subsequently it has yet again recommended the introduction of an employer PRSI rebate to compensate for Government increases to staff costs.

Ibec has overall called for a conservative budget after three previous budgets which largely consisted of once-off measures amid volatile economic environments as consumer grappled with a pandemic followed by a cost-of-living crisis and high interest rates.

Fergal O’Brien executive director of lobbying and influence at Ibec said that despite the challenges over the last four years, Ireland’s economy remains robust and that the next budget will be delivered “from a position of strength” and should be used to “for the right type of investment.” Mr O’Brien added that the Government “cannot afford” in this budget to “give handouts to households”.

Government must now choose between using the Budget “as an opportunity to set out a vision for the country we are building in the next five years or use the surplus to try to put as much money as possible in people’s pockets.” Meanwhile, it also called for action to be taken with the National Training Fund as the skills gap in the Irish labour force continues to widen while the surplus in the swells to around €2bn.